May 17, 2022 18:30 GMT
- Renewed optimism for risk sentiment weighed on the US Dollar on Tuesday. The USD Index is down 0.82% approaching the APAC crossover, extending the week’s losses to over 1%. The majority of greenback pressure was felt during the early European session, with price largely in consolidation mode throughout US trade.
- Exacerbating the USD descent was a surging Euro, which was significantly bolstered by comments from ECB’s Knot that a bigger increase than 25bp cannot be excluded. EURUSD extended gains through 1.0450 and spent little time before breaching back above the 1.05 mark to print a 1.0556 high.
- GBP was among the best performers in G10 FX on Tuesday, closely matched by the Euro, SEK and NOK. This follows the stronger than expected UK labour market data, contributing to both sides of the GBPUSD trade amid the weaker dollar. Cable has gained around 1.3% and has consolidated just shy of 1.2500. Next resistance seen at 1.2512 High May 9.
- Equity gains have also lent support to the likes of AUD (+0.70%) and NZD (+0.75%), however, an underwhelming day for oil saw CAD relatively underperform ahead of Canadian inflation data due tomorrow.
- The USD picked up a small bid as Fed Chair Powell commented on not hesitating to raise rates above neutral, however, the greenback was only able to slightly trim losses.
- Aussie wage price index data overnight before inflation data from both the UK and Canada is scheduled for Wednesday’s session.